Indian cryptocurrency holders who have not declared their crypto gains to the tax authorities could face a hefty tax penalty of up to 70%. The recent Union Budget 2025 introduced stricter regulations for cryptocurrency trading, classifying virtual digital assets as undisclosed income under the Search and Seizure provisions of the Income Tax Act. This means that any cryptocurrency transactions not reported to the tax authorities could be subject to a steep penalty.
Cryptocurrencies will be included under Section 158B of the Income Tax Act, which reports unreported income, according to Indian Finance Minister Nirmala Sitharaman’s Union Budget 2025 announcement.
The budget also introduced mandatory reporting requirements for entities dealing with crypto-asset transactions. These entities will be required to submit transaction details to the income-tax authorities, allowing for better tracking of cryptocurrency activities.
This move by the Indian government aims to bring greater transparency and accountability to the cryptocurrency market. However, it also raises concerns among crypto investors who may have unknowingly violated tax regulations.
Tax experts advise crypto holders to review their tax obligations and consult with qualified professionals to ensure compliance with the new regulations.
